FCC STARTS DIGITAL CLOCK

U.S. TV stations each to get extra digital channel, timetable

WASHINGTON — The FCC handed broadcasters a digital windfall Thursday when it voted to give every TV station in the country a second channel so that they can each begin broadcasting a high-tech signal with the potential to produce sparkling images and CD-quality sound.

In a compromise agreed to late Wednesday night, broadcasters received the digital channels on the condition that they get at least three digital stations up and running in Los Angeles and other top markets within the next 18 months. By the end of two years, broadcasters must deliver three or more digital channels in every one of the top 10 markets.

Thursday’s decision is one of the most far-reaching industrial policies in the history of the United States. The Federal Communications Commission approved a goal of making today’s 230 million television sets obsolete by 2006. At that time, broadcasters’ current channel signals will go dark and it will be impossible to watch traditional TV without the help of a digital converter box. Those boxes are expected to cost approximately $50.

Of course, 2006 is still nine years away, and Congress or the FCC could change its mind about turning off the current channels. The Clinton administration is counting on revenue from an auction of the broadcast spectrum now being used in its plan to balance the federal budget.

Although the digital channels are technically being loaned to broadcasters for nine years, public-interest groups and some members of Congress have blasted the FCC decision as billion-dollar “giveaway” to the broadcasting industry. The FCC has estimated the channels could be worth as much as $70 billion on the open market.

Minutes after Thursday’s FCC vote, National Assn. of Broadcasters prexy Eddie Fritts began hyping the new services broadcasters plan to offer with their valuable new channels. “The dazzling quality and pictures of (high-definition television) are almost three dimensional,” Fritts said, adding, “You really have to see it to appreciate it.”

But the forced march to digital television is likely to get off to a slow start with consumers, especially when the first generation of high-definition sets are expected to cost $5,000, according to Consumer Manufacturing Assn. of America prexy Gary Shapiro. Fritts maintains that after the first sets roll out of stores, “prices will drop like a rock.”

The computer alternative

The computer is also expected to emerge as a viable alternative to the regular set for watching TV. A coalition that includes Compaq, Microsoft and Intel will pitch broadcasters next week on a plan that would put 8 million computers with the ability to receive digital TV in homes next year.

Even the shape of the TV set itself will change from its currently almost square frame to a wide rectangular screen that will be much more friendly to the feature film aspect ratios.

Broadcasters may be giddy about finally getting the digital channels, but that does not mean anyone knows what they will do with extra airwaves. Initially broadcasters will focus on primetime, where they will show off the digital channels’ highest standard — high-definition television. But because digital TVs will use the same language as computers, broadcasters will be able to squeeze five signals into the same space where they can now only offer one.

With networks having trouble programming one channel, and mixed success in cable, it is not clear what good a multiplexed digital service would do for TV station revenue.

The prospect of multiplexed TV station signals does not please the cable industry, which, like many others in Washington, says broadcasters should have paid cash for the airwaves. “For 10 years, we’ve consistently supported granting free spectrum to broadcasters for a straightforward transition from analog to advanced television with a prompt return of the analog spectrum. But we have consistently argued that if new spectrum is made available for multiple TV signals, the broadcasters should pay for it,” National Cable Television Assn. prexy Decker Anstrom said.

Broadcasters replied in kind Thursday: “The cozy cable cartel conveniently ignores the fact that broadcasters are being loaned — and not given — traditional spectrum for a finite period of time. Consumers will be the ultimate winners because digital television offers the potential to curb the monopoly pricing practices,” an NAB spokesman said.

It is not clear what cable’s obligations will be when it comes to carrying broadcasters’ digital signal. It had been expected that the Supreme Court would throw out the so-called must-carry rule, which forces cable systems to carry local broadcasters’ channels, but the nation’s highest court surprised the television industry Monday by upholding the law. FCC officials said Monday that they would decide at a later date which, if any, digital signals cable systems would have to be retransmitted.

The FCC also put off a decision on digital broadcasters’ public-interest obligations. President Clinton is in the process of appointing a blue-ribbon panel to decide what those public- interest obligations should be. FCC chairman Reed Hundt wants new rules that would require TV stations to give free airtime to political candidates, a proposal broadcasters oppose.